Canary Islands Drilling to Pave Way for Explorations in Spain, Says ACIEP's Secretary-General
Natural Gas Europe interviewed Margarita Hernando, Secretary-General of ACIEP, the Spanish Association of Research, Exploration and Production of Hydrocarbons and Underground Storage.
Hernando emphasized that Spain's central government is committed to exploration. In doing so, Madrid met the opposition of regional and local governments, like in the Canary Islands. Nonetheless, Madrid does not intend to give up. Spain's government appealed to the Constitutional Court last Friday to impede the Canary Island´s referendum on Repsol´s $7-billion oil exploration project. The referendum would take place the 23rd of November 2014.
With this as a backdrop, ACIEP had recently released a report on how Spanish people perceive hydrocarbons. In the interview, Hernando shared her opinion on the results. She also spoke about the timing of the explorations. According to Hernando, drilling in Canary Islands is expected to begin at the end of this year.
Natural Gas Europe (NGE): How does ACIEP assess the recently published report about the perception of the hydrocarbons sector?
Margarita Hernando (ACIEP): We do agree on the highly positive assessment of the results because normally the critical mass have a bigger voice than those who are in favor. Therefore, it is important to carry out a research and verify that the 61% of the Spanish population support the exploration of hydrocarbons. Now that the social license is so relevant, knowing that this activity is supported by an important majority of the public opinion gives us strength.
(NGE): In the words of the General Director of Shale Gas España, the exploration of Shale Gas would create a total of 260,000 jobs in Spain. However, as shown in your report, the 55% of Spaniards do not agree on the exploitation of their own provinces´ subsoil. Why do you think this opposition exists?
(ACIEP): This is the so-called 'not in my backyard effect'. There is a lack of perception of the direct benefits on the operations’ influence area . It happens due to a lack of information. It is a largely unknown sector in Spain because only few companies kept being active in certain locations after the 1980s. The fact is that the interest revival of foreign companies on the hydrocarbons sector in Spain have coincided with a wave against hydrocarbons. There is a series of protests focused on the energy mix that the country should have. Basically, the fact of being dependent on hydrocarbons is being criticized. It is a social protest that pretends to achieve a different economic order. Independently on the noise they make or their success, the case is that nowadays, there is no way of replacing radically the hydrocarbons.
(NGE): Why is the revival of hydrocarbons exploration taking place in Spain at this juncture?
(ACIEP): It is the result of technological improvement. Nowadays in Spain the vast majority of the operations are focused in either shale gas or in offshore projects with great depths, which were not reached before due to lack of the necessary technical resources and investment.
The interest offshore increased after the discovery of an important gas field along the coast of Gaza. Therefore, the companies are looking for this same play and prospect in different areas, among them Spain. It is believed that the same type of structure can be found in other spots of the Mediterranean coast. The technology development has also allowed shale gas to be exploited economically.
(NGE): Which would you consider the main obstacle for the industry to becoming established in Spain?
(ACIEP): In our experience the main obstacle is the slowness of the administrative procedures. According to the report mentioned above the administrative burden is also perceived as a problem within this sector. In Spain there are four administrative levels: Municipalities, Autonomous Communities, the central Government and the European Union. At least three of these levels – Municipalities, Autonomous Communities and the central Government – are involved in the decision-making process concerning the licenses. This involves a higher difficulty since the decision is in hands of more stakeholders. Additionally, safety and health licenses and environmental licenses are not unified impacting at local, autonomous and national licensing.
(NGE): That is the case of the laws against fracking passed in several autonomous communities. But eventually they were overturned. In the end, do the autonomous communities have a voice in the final decision?
(ACIEP): The Constitutional Court determined the unconstitutionality of those laws because the authority to rule in the Energy sector generally belongs to the central Government. Nevertheless, even if autonomous communities cannot forbid legally the development of operations, they must intervene in the authorization process. I am not sure whether the operations can be developed without convincing previously the autonomous communities of the benefits that would bring the industry.
(NGE): Is there any area in Spain or any project advanced enough to set an initial date?
(ACIEP): Well, an exploratory drilling well has been recently approved by the Ministry of Industry in the Canary Islands. The project had a significant social opposition, also from the autonomic administration. We hope and believe that after carrying out the exploratory drilling in the Canary Islands, people will realize that explorations are safe and neither tourism nor other sectors will be negatively affected. This will permit authorities to give more licenses. About shale gas, next year is a local, regional and national electoral year and that makes things more complicated.
(NGE): In accordance with your statement, are the licenses a political decision?
(ACIEP): Unfortunately, I think licenses are affected by politics. I also think that the central government is clearly committed to exploration, but that is not the case in many regional governments and municipalities. The legislative initiatives are a clear evidence of it.
(NGE): When are the environmental impact assessments going to be concluded and published?
(ACIEP): The environmental assessments are released in accordance with the laws once they are finished. The dates are dependent on the work progress in each project. It has to be taken into account that concerning new operations such as hydraulic fracturing, all the administrations are very prudent and cautions. Thus, additional investigations have been requested and companies are working satisfy those concerns.
The vast majority of the companies have done it beforehand in other countries or count on a partner within the consortium that has already done it. Therefore, the trustworthiness and safety of the operations is contrasted by extensive experience and knowledge. However, for the Spanish administration everything is pretty new and new things may generate uncertainty.
(NGE): What is the approval rate of shale gas exploration licenses?
(ACIEP): So far, no hydraulic drilling is authorized in Spain. Exploration licenses confer the exclusive right to explore for hydrocarbons and are not restricted to conventional or non-conventional gas. After the exploration license is granted the companies decide which kind of activities they are going to carry out and request the corresponding authorization. Presently, there are around 70 exploration licenses in force and 57 authorization procedures pending. According to our calculations, there are approximately 100 exploration licenses requested. Among these 70 exploration licenses, there would be a certain number of companies which are looking for shale gas, but this information is not included in the license.
(NGE): Thank you very much for the interview. Would you like to add any further information?
(ACIEP): I wish the levels of trust towards the industry improve and people realise that these operations bring many benefits. We are struggling to pass on this information to the responsible stakeholders and common people, so that they gain trust in order to benefit from the great advantages of the hydrocarbons sector for the Spanish economy.
Olalla Tuñas Martínez